The FOMC minutes released on Wednesday

US futures are treading water ahead of the open as traders take cover in the run up to what could be a volatile final session before the bank holiday weekend. The Friday before the bank holiday weekend can quite often be a little lighter on trading volume with traders using the opportunity to take an extended break but with all of the events scheduled today, I expect there to be more activity than normal.

There are several central bank heads scheduled to speak at events today which means there’s a big risk of increased volatility across all markets. Bond markets are only just starting to settle following a turbulent few weeks but I imaging they’ll see plenty of activity today, as some of the markets most influential people give their views on their respective economies and the implications for monetary policy.

Particular focus will be on Janet Yellen’s speech in Rhode Island today because of all the heads scheduled to appear today, the Fed is the most likely to act next. Moreover, the Fed is the only one seriously considering hiking interest rates this year which has the potential to seriously shock the markets which is why it doesn’t just attract attention in the US. Quantitative easing programs from the ECB and the BoJ may act as a buffer to any shock but I doubt they will prevent it altogether.

The FOMC minutes released on Wednesday were very much stuck to the message in the statement that was released following the meeting a few weeks prior. The first quarter weakness is believed to be “transitory”, the economy should recover strongly and a rate hike is likely this year. The problem with this is that in the time between the FOMC meeting and the minutes being released, the data has continued to be quite poor calling into question the Fed’s assessment that it’s only “transitory”.

This makes Yellen’s comments today a potentially massive catalyst for the markets as she will be pushed to either stand by their initial assessment, which effectively keeps a September rate hike on the cards, or accept that a more prolonged period of weakness is possible, which could push the first hike into 2016. I don’t think we can underestimate the kind of impact Yellen’s comments have the potential to have.

Especially if the CPI inflation reading, which will be released shortly before, is in line with expectations of a 0.1% rise. I think it’s clear that the only thing holding the Fed back at this stage is concerns about inflation not rising to 2% within the forecast period and a rate hike would only make that job harder. Unless we see higher wages and increased productivity which increases the probability of higher inflation, the Fed may have to wait, despite being determined to normalize rates.

We’ll also hear from Mario Draghi, Mark Carney and Haruhiko Kuroda at an ECB forum on central banking in Portugal today. All of these are likely to be very active in the next 12 months, with the ECB and BoJ potentially increasing their bond buying program and the BoE hiking interest rates, so their comments will be followed very closely.

The S&P is expected to open 2 points lower, the Dow 10 points lower and the Nasdaq unchanged.